Sec 138 Negotiable Instument Act
mitul shah
(Querist) 29 March 2011
This query is : Resolved
A cheque is returned due to insufficient fund, further this cheque was issued to reimburse/ in connection to cancel existing agreement.
What kind of legal action can be initiated? in what time?
what is the procedure in court of law?
A V Vishal
(Expert) 30 March 2011
According to Section 138, when any cheque drawn by a person on an account maintained by him in a bank, is returned on the ground of insufficiency of funds, he is said to have committed an offence. Before this amendment, people were resorting to Section 420 of the Indian Penal Code for the offence of cheating. Procedure for prosecution: The proviso to Section 138 lays down the procedure before launching the prosecution for dishonour of cheques:
The cheque should be presented to the bank within six months.
The payee on receipt of information from the bank that the cheque has not been passed for want of funds, should make a demand for payment of the cheque amount by notice in writing within 30 days from receipt of information from the bank.
If the drawer of the cheque fails to make payment of the money covered by the cheque to the payee within 30 days of the receipt of the notice from him (payee) and fails to pay, he commits the offence under Section 138.
There is a further step to be followed for prosecuting the drawer for the offence under Section 138 - "such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138.
Advocate. Arunagiri
(Expert) 30 March 2011
Engage an advocate he will guide you for initiating legal proceedings.
Amit Minocha
(Expert) 30 March 2011
a compliant u/s 138 NIA an be filed besides suit for recovery of the amt along with it under summary procedure prescribed Order XXXVII CPC. However, you would need a lawyer to do so due to technicalities involved.
G. ARAVINTHAN
(Expert) 30 March 2011
you need to send legal notice within a week of bouncing of cheque.
B.B.R.Goud.
(Expert) 05 April 2011
hi. one has to give legal notice for the payment / explanation for the cheque bouncing with certain time period, upon the falure of redressal, has to institute the cheque bouncing case/the legal proceedings in the court under sec 138 NI act.
